Second, although the Commission had proposed extending the disclosure requirements of Form SF-1 and Regulation AB to privately placed ABS, the Commission did not adopt the proposed change. The Commission stated, however, that the proposal remained outstanding.

Thus, for most issuers of covered bonds, Regulation AB II will not be applicable. Most covered bonds issued in the U.S. are issued under Rule 144A as private placements, to which Regulation AB does not currently apply. Moreover, even if the SEC were to extend Regulation AB to private placements, since covered bonds are not asset-backed securities, Regulation AB would still not apply to Rule 144A offerings of covered bonds.

For the Canadian issuers with SEC registered covered bond programs, however, there still remains the question of whether they will be required to make loan-level disclosure for the mortgage loans in their cover pools in accordance with the requirements of Regulation AB. Each of the Canadian issuers requested a no-action letter from the SEC staff to enable it to register its covered bond program. (See, e.g., the RBC no-action letter.) Each issuer stated in its letter that it would provide offering disclosure and periodic reporting in connection with its covered bond offerings consistent with the requirements of Items 1111 and 1121 of Regulation AB. These two provisions of Regulation AB have now been revised by the SEC’s amendment of Regulation AB to require disclosure of 270 data fields for each residential mortgage loan. Whether the SEC staff will extend the new loan-level disclosure requirements of revised Items 1111 and 1121 to these Canadian covered bond issuers is a question.

If the SEC decides to require the Canadian banks to disclose loan-level information for each residential mortgage loan in their cover pools in accordance with Items 1111 and 1121 of Regulation AB, this could prove troublesome. These provisions require the disclosure of information that raised concerns under U.S. consumer privacy laws. In the end, the SEC needed to obtain a letter from the Consumer Finance Protection Bureau stating that the disclosure of information as required by the SEC under Regulation AB would not result in a violation of consumer financial privacy laws. However, this protection for issuers is only protection from violation of U.S. laws. Non-U.S. issuers do not benefit from this protection if they disclose information about consumers in the issuers’ home jurisdictions.